Gerald De Saram
Paints major hit by 12% volume decline
CIC Paints, the predominant player in the
country's paint market in both volume and
value, has seen a dip in these indicators in
the first eight months of this year
vis-a-vis the first eight months of last
year due to the country's current economic
CIC Paints Managing Director Gerald De Saram
told The Sunday Leader that the decline in
volumes during this period was 12%, while
the value decline was less, mainly due to
De Saram said that CIC has 40% of the local
market in volume terms and around 45% in
value terms. He valued the local paint
market at between Rs. 15-18 billion.
He said that this decline was due to the hit
taken by the condominium and housing sector
caused by a combination of the prevailing
security situation and the high inflationary
and high interest rate scenario in the
"The years 2005 and 2006 were some of the
best years for the paint industry due to the
condominium and housing market boom that
existed then, coupled with a relatively low
inflationary regime," De Saram said.
This boom, in part, was however fuelled by
the tsunami housing sector growth which now
no longer exists, he said.
"Some of our premium paints during that
period grew at the rate of 12% year on year
(yoy) in volume terms, while those of a
lesser variety grew at a rate double that
number, at 25% yoy, he said.
Then, Sri Lankans living abroad were
investing in housing and apartment stocks,
with the boom particularly felt along the
coastal belt in Colombo and in the
neigbouring suburbs along that way in the
south, said De Saram.
But with the deteriorating security
situation in Colombo, begun in 2006 or
thereabouts with bombs exploding in the
city, followed by rising inflation, those
hit the industry, he said. And, rising
building costs are also dampening this
People stopped investing in housing and
Inflation at present is over 20%. "Margins
are being squeezed," he said. "We are a
nation at war."
De Saram said that between 65-70% of the
demand in the paint industry is from the
housing stock, 20-25% from the re-finished
paints market, ie vehicles, and 10% from the
The high interest rate regime is also a
dampener to the housing market, he added.
"But despite this gloom and doom situation I
remain an optimist," said de Saram. Bombs no
longer explode in Colombo due to the
heightened level of security," he said. De
Saram expected an era of "absence of war" to
dawn, as, what is now present in the East,
where the LTTE would once again be forced to
resort to hit and run tactics, as opposed to
"And CIC's associate company, the CIC Group
which has a 49% equity stake in CIC Paints,
plans to invest in two projects in the
recently cleared East, one a dairy project
and the other, a banana cultivation
project," De Saram said. People will then
get jobs and the economy will grow, he said.
Inflation to surge
CB set to resubscribe to T. Bills
Central Bank (CB) is set to re-purchase
Treasury Bills (T. Bills) at this week's
auction thereby increasing market liquidity
and with it, keeping a check on interest
rates, but the downside is that this would
cause inflationary pressure, market sources
who did not want to be named told The Sunday
Currently inflation is running at 20% plus.
In a market starved of liquidity (the
market, on a cumulative basis has been short
of Rs. 34.5 billion in the past eight
consecutive market days) has forced the CB
to open its overnight reverse repurchase
window and lend to the market in an interest
rate mix comprising the 12% concessionary
lending rate and the 19% penal rate-for
those who had exceeded their limits, to meet
The present market illiquidity is believed
to be caused by heavy government borrowings
in order to meet its rising expenditure
needs, primarily fuelled by the war.
But this has made interest rates to move up.
At last week's T. Bill auction, the weighted
average yields (WAYs) of 91 day T. Bills
moved up by 82 basis points (bp) to 17.22%,
those of 182 day T. Bills by 83 bp to18.28%
and those of a 364 day maturity by 72 bp to
Sale of T. Bills is a popular way for the
government to find money from the domestic
market to meet its expenditure needs.
However, in the previous week's primary T.
Bill auction, when the market quoted for T
Bills of 364 day maturity at 17.75%, the CB
rejected such bids, but last week they
accepted bids for this tenure which were
even as high as 19.50%, giving the wrong
signals to the market, they said.
Meanwhile, the CB, which did not put out for
re-issue maturing T. Bills of a 91 day
tenure for the past four to five weeks in
the weekly primary T. Bill auction, however
made available that maturity too for
re-issue at last week's auction, which saw
its WAY surge by 82 bp to 17.22%.
"As such investors are going to bid high at
this week's auction," the sources said.
This auction, similar to last week's T. Bill
auction, will have for re-issue Rs. 10
billion worth of maturing T. Bills, with the
splits comprising Rs. one billion worth of
maturing T. Bills of a 91 day tenure, Rs.
four billion worth of maturing T. Bills of a
182 day tenure and Rs. five billion worth of
maturing T. Bills of a 364 day tenure.
"However, the CB, in order to curb interest
rates is going to subscribe to those, at
rates lower than that which the market is
demanding," they said.
"There are no captive funds to subscribe to
these maturing T. Bills, those have reached
their zenith in making such investments,
they have no more capacity to take," they
Captive funds are those funds that are
controlled by the government such as the two
state commercial banks, National Savings
Bank and the EPF and ETF funds.
As such the CB will be forced to take-up the
majority of those maturing T. Bills in order
to curb rates. But that will have a double-barrelled
effect on the market, ie whilst fuelling
liquidity, at the same time causing
inflationary pressure, they said.
Meanwhile, in the secondary market, T. Bonds
maturing in July and August 2010 (the
shorter tenures) had surged by nearly 100
basis points to be trading closer to the 19%
levels (it was 18.60% on Friday) since
September 17, after a foreign bank allegedly
set the ball rolling by disposing of their
T. Bond holdings, with the others, following
herd like, also beginning to dispose of
their T. Bond holdings, resulting in the
secondary market asking for higher and
higher yields, for the purchase of such T.
Bonds, they said.
That foreign bank saw the writing on the
wall, now others are following suit, adding
further upward pressure on interest rates in
the secondary T. Bond market, the sources
Therefore the time is now ripe for the CB to
subscribe to those maturing T. Bills in
order to provide liquidity to the market,
CB's T. Bill holdings which were a high of
Rs. 60 billion a year ago has since come
down to Rs. one billion, giving them room to
re-enter the market, they said.
CB sources who did not want to be named,
admitted that they were studying this
option, but remained non-committal in regard
to the course of action that they would take
at this week's primary T. Bill auction.
Lubricant sales volumes drop 9%
The local lubricants industry witnessed a 9%
year on year (yoy) drop in volume terms in
the first eight months of the year, with a
key industry player warning that the
"survival of the fittest" law would prevail
in such a scenario.
"With 14 players in the local lubricants
industry, in a market that is retarding,
there is a likelihood that the 'survival of
the fittest' law would prevail, Kishu Gomes,
Managing Director of Chevron in Sri Lanka
told reporters on Wednesday.
He told The Sunday Leader that if such a
situation develops, the market would end up
with only two or three players.
And markets in the North-East are virtually
zero further aggravating the problem, he
Ceylon Petroleum Corporation is also
planning to enter the lubricants markets, he
said. Chevron by far however is the biggest
player in the local lubricants market, with
some 85% market share.
The company in the 2007 financial year saw
revenue grow by 12% year on year (yoy) to Rs.
8.7 billion, while profit after tax grew by
34% yoy to Rs. 1.1 billion.
Gomes put the local lubricant market's value
in volume terms at 47 million litres.
However, the industry's volume growth is
being squeezed due to the downturn in the
economy, coupled with the stagnant growth in
the vehicular industry, he said. According
to Gomes, vehicles contributed to 60% of
lubricant sales and industrial, the balance
But in contrast, Chevron's exports, in
particular to Bangladesh and the Maldives
however are growing.
The company also exports to its associate
company in India, with exports contributing
to 10% of the company's overall volumes.
Chevron however is not physically present in
Bangladesh and the Maldives, with the former
having a large informal (grey) market,
which, according to some estimates, is about
50% of that market's size.
Meanwhile Gomes said that they paid a total
of Rs. 2.6 billion as government levies and
taxes last year, with this figure expected
to go upto Rs. 3.2 billion this year.
He however said that it was not feasible to
try to gain tax concessions under the
government's 300 factories programme by
relocating their operations to "difficult"
areas due to logistical problems.
"If you are thinking of ports, crucial for
this type of operations, then, Colombo is
60% of the market, while the other port
player which is Trincomalee comprises only
3% of the market," said Gomes. Therefore
it's not feasible to re-locate, in order to
get tax benefits, he said.
LIOC however has the advantage of the
Trincomalee tank farms, which have been
leased out to them, as such they have their
lubricant blending operations there, a
process that began late last year.
Chevron has their blending plant in
Kolonnawa and their base oil tank farm in
Mutwal. Base oil, together with additives
Gomes warned of the birth of a grey market
in Sri Lanka as well, and said that the
country has some time to go before it
becomes a brand conscious market. He said
that the danger in using spurious lubricants
is that it could damage vehicle engines.
They have been helping law enforcement
authorities to make such detections, where
there had even been instances, where such
spurious lubricants had been sold as branded
lubricants in the market.
The lubricants regulator is the Public
Utilities Commission of Sri Lanka (PUCSL).
He alleged that the PUCSL uses their
laboratory to test the quality of lubricants
in the local market.
"Being part of a multi-national corporation,
helps us to piggy-back on economies of
scale," Gomes said. Fifty one per cent of
the company's equity is held by its parent
company, Chevron, a global operator in the
petroleum industry. The rest of the shares
are held by the public.
Meanwhile, the government is one of their
biggest customers, among those being the
armed forces, Railway, CTB and the CEB; as
well as independent power producers.
Consumer spending shrinks
Inflationary pressure is hitting the purse
of the consumer.
Macro economic indicators and consumer
health indicators from a business end were
mirroring different sets of results. Despite
Sri Lanka's economy expanding by 7% in the
second quarter of 2008 according to the
Central Bank, research data indicates that
the quality of life of a typical Sri Lankan
Economic strategist and business personality
Rohantha Athukorala addressing the Sri Lanka
Economic Association (SLEA) sessions 2008
posed the question if Sri Lanka is actually
growing. His argument was that even though
there is a strong GDP growth that Sri Lanka
is registering in 2008, the movement of
consumers from key household categories due
to inflationary pressure, can lead to one
asking the question if Sri Lanka is actually
His argument was that macro economic and
consumer health indicators from a business
end was mirroring different sets of results.
Athukorala said as per household data from
Lanka Market Research Bureau, reveals that
inflationary pressure is hitting the
consumer's purse. Powdered soft drinks
penetration that had increased by 30% in
2007 had dropped by 23% in 2008 which means
that households are moving out of the
5% of households had moved out of the
consumption of cordials.
And 19% from jams which were all
demonstrating a high penetration growth last
year. On the Personal care sector, the use
of shampoo had dropped by 3% as against
the12% growth experienced in 2007.
On volume too for instance shampoos that
was depicting a positive growth by 23% in
2007, has seen reduction in the growth to 7%
in 2008 which means overall consumption is
Athukorala said that the challenge for
policymakers is to determine the balance
that needs to be maintained between
Inflation and Growth in Sri Lanka as a 15.8%
inflation in 2007 was able to drive a growth
of 6.8% whilst Bangladesh with an inflation
of 8.4% propelled a 5.6% GDP growth. "We
need to not only play the number game but
also understand the implication to the
quality of life of a Sri Lankan," said
Athukorala. Organizations must yet
invest on R&D to drive innovative products
to be launched to meet changing consumer
requirements, he however said.
The private sector must also get linked to
the national agenda, he said.
The Colombo bourse, dogged by foreign
inactivity as a whole due to the global
financial crisis, has been on the backfoot
as a result this month, market sources told
The Sunday Leader.
Foreigners are not looking at Sri Lanka
because of the global downturn, they said.
And added to that the island has its own
share of problems like rising inflation and
interest rates, coupled with the war, the
sources said. Victory in the warfront is in
sight, but something "radical" on that score
is yet to take place to give the bourse that
boost, they said. They predicted that market
decline would continue in the new week
beginning tomorrow as well.
Meanwhile, the market, since the beginning
of this month and upto Friday has seen the
benchmark ASPI lose 199.13 points, while the
more sensitive MPI has lost 300.42 points.
Market capitalization during this period has
come down by Rs. 62.8 billion, while daily
turnover during this month has been
averaging a lowly Rs. 192.2 million to date.
Total foreign purchases for the month upto
Friday has been Rs. 1.5 billion. But if a
"one off" foreign purchase figure of Rs.
923.3 million made on September 16 is taken
out, then, foreign purchases made so far for
this month amounts to a mere Rs. 576.7
Similarly if the turnover of Rs. one billion
made by the bourse on September 16 is taken
out, then, average daily turnover so far for
the month is a mere Rs. 149.7 million.
Meanwhile, foreign sales to date made for
this month amounted to Rs. 396,5 million.
Though there is a net foreign inflow, that
has to be looked at in the light of turnover
figures, which is very low, they said.
The Colombo Municipal Council (CMC) has
introduced a new module for businesses to
obtain a license to operate and trade. If
the criteria are met, the license will be
issued in under 25 days.
These are in respect of business enterprises
in Colombo that have been operating without
a trade license from CMC.
According to the World Bank's (WB's) Doing
Business indicators, obtaining licenses and
permits for starting a business in Colombo
takes more than 160 days and involves 17
procedures. The lengthy process undermines
efforts to promote small and medium
enterprises, private investment, and private
Licenses are issued by CMC to 148 different
business categories, the majority being
catering establishments and restaurants,
barber and hairdressing saloons, vehicle
repair shops and garages, LP gas stores,
tailoring establishments and manufacturing
IFC, a WB member, assisted CMC to simplify
the issuance process for businesses.
Hayleys at UN
A Sri Lankan company was chosen as one of
four private sector representatives
worldwide to address Secretary-General Ban
Ki-moon at the opening plenary session of
the first United Nations Private Sector
Forum on Millennium Development Goals (MDGs)
and Food Sustainability. Representing
Hayleys PLC, Group Chairman N. G.
Wickremeratne spoke on 'Water Access and
Management,' the theme assigned to the first
of seven roundtable discussions initiated by
the UN Global Compact Office.
Four Heads of State, Chairmen and CEOs from
33 international companies, the heads of 17
global business associations, 16 civil
society organisations and foundations and 17
UN agencies and senior bureaucrats from four
governments attended the September 24 event
in New York. Among those who participated in
this effort to tackle the impending global
food crisis were former US President Bill
Clinton, Sir Bob Geldof, World Bank
President Robert Zoellick, Howard G. Buffett,
WFP Ambassador and son of Warren Buffett;
Intel Chairman Neville Isdell, Coca Cola
Company Chairman Lord Michael Hastings,
Craig Barrett (KPMG), Ericsson Chairman
Carl-Henric Svanberg and International
Chamber of Commerce President Guy Sebban.
Sri Lanka Ceramics Council organized a
seminar recently on the topic "Alternative
Fuel Resources-Have you explored all
options" at the Cinnamon Grand Hotel.
It was organized in order to encourage
ceramics and other industries that are
heavily dependent of fossil fuels, to
convert all or part of their operations to
alternate fuels such as Dendro or Gasified
The ceramics industry is a high consumer of
energy and is finding it difficult to remain
competitive with other countries in the
region like Thailand and China. Energy costs
form one of the highest components of
manufacturing cost. The recent energy price
increases have created enormous problems to
the industry, severely eroding its
The seminar was well attended by ceramic
sector senior managers and covered
presentations on the possibilities and
advantages of switching to alternate fuel
resources, with special emphasis on process
modifications and additional equipment for
such conversions. They also discussed the
available financial and other support for
Mindshare, the global marketing and media
network, on Wednesday unveiled a
comprehensive worldwide rebrand of its
The redesign, developed in partnership with
branding agency Moving Brands, coincides
with the WPP agency's ongoing global
restructure announced earlier this year.
The network's branding retains the signature
colour purple, which was established at its
inception from the merger of JWT and Ogilvy
& Mather media departments in 1997, but
includes a refresh of the agency's brandmark
and visual identity.
The symbol has been created to reflect the
structure and form of Mindshare's business.
It shows two forms coming together to create
a "new, strong" form reflecting Mindshare's
partnerships with clients, suppliers and
other agencies. The flow of colour
symbolises the flow of creativity across the
business and the segmentation mirrors the
bringing together specialist expertise
within Mindshare's "open source" approach to
client business which enhances a platform
In visual form on the printed page, this
will represent the agency's new approach,
re-engineering its structure from more than
a dozen separate specialist departments to
four integrated, collaborative groups:
Client Leadership, Business Planning,
Invention and The Exchange.
Mindshare Worldwide chief executive Dominic
Proctor said: "When we launched we wanted to
be the agency of the future. After 10 years
that objective is stronger than ever. To
prepare us for that future, today we unveil
our new branding, which is a further
indication of our ambition indicated by our
ongoing global restructure."
Managing Director Sri Lanka Pratibha Vinayak
said: "The new corporate identity reflects
our focus in partnering our clients in the
emerging areas of marketing investment
planning and helping create and run
integrated 360 marketing programmes by
becoming almost like their marketing spine."
English & private sector
This refers to the news item with the
heading "English, least important" which
appeared in the Business pages of The
Sunday Leader on September 21, 2008.
This caption may create the impression among
the readership that English is not important
for private sector employees.
As correctly reported in the body of the
news item, private sector requires their
employees to be able to communicate in
However, it is not about a high degree of
fluency in spoken English, rather it is
about effective communication.
It is necessary to encourage persons of high
intellect and ability with a working
knowledge in English to seek employment in
the private sector and while in employment
to build up their level of fluency in spoken
Dr. Anura Ekanayake,
Ceylon Chamber of Commerce
Business Editor's Note: Then why did
Ekanayake, in the course of his reply to the
question of the role of English in the
private sector say that language is the
Three win "Miles"
A stroke of good fortune saw three Emirates
passengers in Sri Lanka win 250,000 Skywards
Miles from the frequent flyer programme.
By booking their travel online, the three
passengers qualified for a draw which
resulted in travel during the months of May
and June 2008 had an equal winning chance.
The first prize of 100,000 Skywards Miles
was won by Master Jamieneil Maddock, while
the second and third prizes of 75,000 Miles
each went to Dishan Wickramaratne and Mrs.
The Skywards Miles won at this promotion
were in addition to the miles each of these
passengers earned in respect of their
flights. The Skywards Miles won and
accumulated can be redeemed for free air
tickets or many other benefits offered by
Skywards, including upgrades, hotel
accommodation, excursions, exclusive
shopping and fine dining.
Emirates operates 17 services a week from
Colombo to Dubai and four services a week
from Colombo to Singapore and Jakarta.
HSBC JCI TOYP awards ceremony was held
recently at the Cinnamon Grand Hotel with
British High Commissioner for Sri Lanka and
Maldives Dr Peter Hayes as the chief guest
and HSBC Sri Lanka and Maldives Chief
Executive Officer Nick A Nicolaou as the
guest of honour.
HSBC JCI TOYP award winners for this year
included: Legal Accomplishment: Chrishmal
Warnasuriya; Academic Accomplishment: Dr
Jayanie Bimalka Weeratna; Contribution to
Arts: Ms Nadeeka Chandrasekara; Contribution
to Media: Sanath Nandana; Humanitarian
Service: Ashan Pravin Malalasekara;
Voluntary Service: Rohitha Matararachchi;
Technological Development: Dr Kalum
Udagepola; Medical Research: Drs. Neil
Darrel Fernandopulle and Vajira Dissanayake
and Personal Accomplishment-Sports: Kumar
Another one joins Singer
The extensive island-wide branch network of
Singer Sri Lanka has joined the bill payment
network of Lanka Bell.
Cash or credit card payments made to any of
350 Singer outlets will now be credited to
Lanka Bell subscribers' accounts. The new
arrangement will result in Lanka Bell's bill
settlement network growing to more than
Singer already retails Lanka Bell
connections and offers easy payment schemes
to buy them.
Colombo Dockyard has attracted new orders
for ship building which would improve its
revenue in the coming quarters. There is a
strong growth in orders from Indian
companies predominantly in relation
to ship repairs. 60% of the company's
customer base is from India while orders
from Pakistan and Singapore companies are
also on the rise.
The company in the second quarter (2Q) ended
June 30, 2008 saw revenue grow by 27% year
on year (yoy) to Rs. 2.1 billion, while net
profit in the Q under review grew by 112%
yoy to Rs. 393 million.
Dockyard, in the first half (1H) ended June
30, 2008 saw revenue grow by 39% yoy to Rs.
five billion, while net profit grew by 68%
yoy to Rs. 821 million. (Source John Keells
SCB & T Bond sales
Standard Chartered Bank (SCB) in reference
to the article that was published on these
pages last week under the heading "SCB sells
T Bonds" says that the information
presented is inaccurate.
It further said that the facts and figures
quoted in this article are incorrect. The
periodic sale of Treasury Bonds is natural
for any financial institution and is in no
way connected to any financial market
situation as insinuated in the article.
It also said that they have a long standing
business relationship with The Sunday Leader
and an article of this speculative nature
was published without first approaching the
Bank for verification.
Business Editor's Note: SCB neither confirms
nor denies that they sold Treasury Bonds (T
Bonds) on September 17 as was said in that
article, other than saying that the periodic
sale of Treasury Bonds is natural for any
Nor does SCB give the "correct" facts and
figures other than saying that The Sunday
Leader had got those wrong.
The relevant excerpts of our last week's
article said that yields of T Bonds maturing
on July 1, 2012 went up by 20 basis points
allegedly because SCB Colombo branch began
disposing of their T Bond portfolio.
This rise may be due to the sub prime
mortgage crisis which is hitting U.S. and
European financial markets, as a result of
which SCB Colombo Branch may have had
received instructions from their regional
office to dispose of their T Bond portfolio.
HNB, United Motors tie-up
United Motors Ltd (UML) recently joined
hands with Hatton National Bank, a premier
commercial bank with over 173 customers
centres spread islandwide, to promote Canter
Trucks through a specially designed leasing
package. The package offers a special price
coupled with lowest lease rentals.
Imports grow twice as fast as exports
Export earnings surged by 24.1% in July
2008, reaching the highest ever recorded
value of US$ 849 million, following the
marginal decline witnessed in June 2008.
At the same time import expenditure
increased by 52% yoy to US$ 1,262 million in
July 2008. Substantial increase in oil
prices raised the imports of petroleum,
fertilizer and chemical products in July
2008. The highest monthly average price of
imported crude oil, US$ 134.34 per barrel,
was recorded in July 2008. This compared
with the imported oil price of US$ 71.25 in
July 2007. Textiles and diamond imports were
also instrumental in raising import
expenditure on intermediate goods which is
an indication of continuous growth in the
apparel and gems and jewellery exports in
the future. In consumer goods sector,
growth in food and beverage sector
outweighed the growth in other consumer
goods, mainly due to wheat imports.
The increasing trend in the import of
investment goods imports continued further,
as a result of on-going high investments by
both, the public and private sectors, with
marked increases in building materials and
machinery and equipment. The cumulative
expenditure on imports during the first
seven months of 2008 increased by 35.4% yoy
to US$ 8,267 million. Non-oil imports during
this period amounted to US$ 6,178 million,
which is a 27.2% yoy increase over the
corresponding period last year.
Meanwhile agricultural exports grew by
54.7%, bolstered by a 70% share of tea, as a
result of both improved prices and higher
Tea prices which have been on an increasing
trend from early 2007, increased further,
pushing the average tea price to US$ 4.17
per kg in July 2008. Minor agricultural
exports also grew at a faster pace relative
to other agricultural exports, supported by
strong performances in vegetables, fruits,
cloves, cinnamon and unmanufactured tobacco.
Apparel exports which suffered in June 2008
showed a turnaround in July 2008, recording
a 17.6% growth. Food and beverages,
petroleum and rubber based products were
among the other industrial products that
performed well in July 2008. Cumulative
export earnings in the first seven months of
2008 were US$ 4,737 million; recording a
12.1% year on year (yoy) growth.
The trade deficit reached US$ 414 million in
July 2008 compared to a US$ 146 million
deficit in July 2007.
Beruwela's losses up 34%
Beruwela Walk Inn, a non operational
company, in the 2Q ended June 30, 2008 saw
its losses increase by 34% yoy to Rs. 7.06
million. The company in the 1H ended June
30, 2008 saw its losses increase by 37% yoy
to Rs. 14.58 million.
HNB Assurance among the top
HNB Assurance, a Hatton National Bank
subsidiary, started back in 2001, heralded
the dawn of a new era in insurance.
Though the company is just seven years old,
the last year has seen HNB Assurance's
turnover and net profits increase by an
incredible amount, which includes an
increase in life insurance premium earnings
from Rs. 503 million in 2006 to Rs. 768
million in 2007-and has become a major
player in the insurance industry field.
The company has gone through a period of
transformation, from a relatively small new
entrant to a company with a significant
market presence. The company's impressive
performance over the last six months with
regard to turnover and profitability is only
proof of the immense potential that lies
The Sunday Leader speaks to HNB Assurance
PLC Managing Director Manjula de Silva about
the company's latest progress.
Question (Q): What growth has HNB Assurance
made in terms of turnover over the last 6
Answer (A): HNB Assurance has
produced impressive results by achieving a
33% growth in its turnover as of June this
year. General Insurance grew by 19% to
record Rs. 417.5 million while Life
Insurance grew by a staggering 51% to reach
Rs. 443.8 million. The combined turnover
amounted to Rs. 861.3 million. We hope to
reach Rs. 2 billion by the end of this year.
Q: HNB Assurance has done remarkably well in
the Life Insurance sector when compared to
the General Insurance sector, how do you
A: We see more potential in Life
Insurance and we are very selective of
General Insurance. I think the main reason
we have done well in Life is due to the fact
that we have a strong presence in rural
areas and were among the first to tap the
rural market and we place much emphasis on
this area whereas most other insurance
companies are concentrating on Colombo.
Q: How do you see HNB Assurance positioned
in the market today?
A: In an industry dominated by
giants, we are coming up almost unnoticed.
We are ranked 6th among all the 14 insurance
companies, which means we're already in the
upper half. We were also recently ranked
57th in the top 100 brands in the country by
LMD and Brand Finance and received an 'A (lka)'
rating by Fitch, being only the 2nd
insurance company in the country to earn
such recognition. This is huge for a
company of our size and age.
Q: Has HNB Assurance launched any new
A: We are trying to do more for our
customers in this area. Motor Guard, one of
the company's most successful schemes to
date was re-launched recently with
additional features. It's now a vehicle
insurance package which includes on site
inspection of the damaged vehicle requiring
no police report for claim settlements,
access to company recommended garages, a 24
hour hotline for motor claims and a No Claim
Bonus (NCB) which goes up to 75% within just
six years. Because accidents are inevitable
in a country such as this with so many
vehicles on the road, we felt it is unfair
to penalise people who have just one
accident in a year. So if a policyholder has
just one accident then he's not penalised
and is entitled for NCB but if he has more
than one in a year then he'll just have a
lesser amount in the NCB. Also if a
policyholder has two vehicles, he will be
entitled to the same NCB on the second
Through the "Motor Max" product, we offer
HNB Leasing customers one motor insurance
policy for the entire duration of the lease.
Q: Do you have any insurance investment
Super 5 is a five year Life Insurance policy
which guarantees 200% (twice) of your
initial investment at maturity and in the
sudden demise of the policyholder, even if
it's the day after the investment, the
beneficiaries will received twice the amount
deposited and in the case of accidental
death will receive three times the amount.
Q: What about policies that see to the
need of children's education?
We have a product called Scholar, and this
is targeted at parents with children in
international schools because we felt that
there was a dire need for a policy that will
continue a child's education in the case of
their parent's demise. This policy ensures
the payment of school fees which is a
blessing for parents and schools.
Q: Are there any special provisions for
motor vehicle owners?
A: We have realized that most vehicle
owners (especially motor cycle owners)
happen to be the sole breadwinner of the
family and for the most part don't have a
life insurance cover. So we provide a cash
grant of Rs. 250,000 in the event of death
where the spouse may be unemployed and the
kids are in school.
Q: What is HNB Assurance's reach like in the
A: HNB Assurance has a total of 40
branches that are spread across the island
that reach places like Batticaloa, Kalmunai,
Jaffna, and Vavuniya. In addition, we obtain
business through the HNB's bank network
numbering over 170 branches. We also have a
strong team of insurance advisors, over 2000
Q: What new CSR initiatives has HNB
Assurance embarked on?
A: We have many initiatives underway.
We have so far undertaken the task of
providing water to four schools and another
six should be complete soon. We're also
working with the railways in putting up
mirrors at unprotected level crossings and
if that proves successful we will put up
We'll also be publishing a children's book
by Somalatha Subasinghe and another book on
fire prevention by S.K. Kariyawasam.
CRTU completes a year
Sri Lanka's only state-of-the-art private
radiation treatment facility for cancer
patients completes one year of operation
this month and its owner Ceylinco Healthcare
Services Ltd. (CHSL), reports that its first
year was well above-target.
The Ceylinco Radiation Treatment Unit (CRTU)
at Park Street, Colombo started operations
on September 11, 2007 with Sri Lanka's first
Linear Accelerator (Linac), the
international Gold Standard in the delivery
of accurate, intensity-modulated radiation
therapy for the treatment of many forms of
The Unit has in its first year dispensed 439
radiation treatments, 313 of which were from
This included the first ever IMRT (Intensity
Modulated Radiation Therapy)carried out in
Sri Lanka, a landmark, that, according to
Senior Oncologist and the Centre's Medical
Director Dr. Sarath Abeykoon demonstrates
that patients can undergo high quality
radiation treatment in Sri Lanka, thereby
making overseas travel unnecessary and
enabling substantial savings.
"The bold decision by the Ceylinco
Healthcare Centre to invest in an
ultra-modern radiation treatment unit has
filled a void in the local
healthcare infrastructure," Abeykoon noted,
disclosing that the need for a second Linac
has been identified.
The six-storey, 19,000 square-foot CRTU
comprises a concrete bunker built to
specifications provided by the Atomic Energy
Authority, the Linac and two reception areas
on the ground floor.
The upper floors house the Brachytherapy
unit, Mould Room, CT Scanner and CT
Simulator rooms, Computerised Treatment
Planning unit, Iodine Treatment unit,
doctors' rooms, two wards and individual
patient rooms and suites.
The unit also offers facilities for
chemotherapy treatment, administered in a
comfortable, "non-hospital" atmosphere.
Global Payments Asia-Pacific Ltd (Global
Payments), a joint venture between Hongkong
and Shanghai Banking Corporation Ltd (HSBC)
and U.S.-based Global Payments Inc. (NYSE:
GPN), has introduced a secure GPRS-powered
mobile payment service called Global
MobilePay that provides mobile card
acceptance capabilities for merchants in the
Global Payments is one of the first payment
processors to launch a mobile payment
solution for merchants across Asia. This
service is now available in Brunei, China,
India, Malaysia, the Maldives, the
Philippines, Singapore, Sri Lanka and
Taiwan. Global MobilePay is a
sophisticated card acceptance solution that
uses GPRS wireless communication network for
merchants that need to accept card payments
beyond fixed locations or when traditional
land line communication do not meet business
needs. Merchants can now conduct
face-to-face transactions anytime and
anywhere. Through Global MobilePay, Global
Payments now provides a package that
includes a mobile payment terminal, SIM card
and GPRS network connectivity through a
telecoms partner as well as payment
processingservices. This new offering from
Global Payments is for merchants who need to
accept card payments away from a retail
countertop, such as cash-based delivery
service providers or trade show exhibitors.
With Global MobilePay, mobile merchants can
now accept electronic payments to improve
customer service and reduce the cost of
handling cash significantly. For merchants
in hospitality industries, Global MobilePay
can help enhance customer payment
New processing centre
Continuing the fast paced stride in
enhancing and developing the support
services of the Bank, Nations Trust Bank PLC
(NTB) recently unveiled its new processing
centre, an eight storeyed office located in
The Processing Centre serves as the base for
the Bank's operations and process team from
Information Technology, Call Centre,
Operations as well as numerous other key
back office functions that play a pivotal
role in the day to day functioning of the
Bank. The new architect designed office
features a two storeyed car park, in
addition to plush interiors and work
stations, several meeting rooms, break out
areas for staff as well as a restaurant
The building offers a picturesque view of
the city and has been designed with the
intention of providing staff, often working
late hours on shift basis, the convenience
of a comfortable office environment.
The new premises were opened by NTB Chairman
Ajit Gunawardene in the presence of the
Bank's board of directors, corporate
management as well as staff and guests..
Gunawardene said, "NTB began operations
almost nine years ago and has made great
strides in becoming a formidable force in
the industry. We are delighted to offer our
process and operations centric staff a
spacious new office and plush surroundings
that will serve as their new home away from
NTB Director/Chief Executive Officer
Zulfiqar Zavahir said, "It is with a sense
of pride that we open our new Processing
Centre. The Bank has forged ahead at a
commendable pace, and the commitment to
provide our customers with flexibility and
convenience will continue to be the key
drivers. This building marks a new chapter
for the Bank and we are pleased with the
response and positive reactions by the staff
located at the new premises."
Toroid signs up Microsoft
Toroid International (Pvt) Ltd., a
transformer manufacturing company has
entered into an Enterprise Agreement with
Microsoft Sri Lanka, to ensure "faster
return on investments and empowering it with
better risk management capabilities."
Toroid becomes the second organisation in
the Katunayake EPZ (Export Processing Zone)
to sign an Enterprise Agreement directly
with Microsoft Sri Lanka. The agreement is
specifically targeted at large scale
business entities, companies having 250 or
Toroid Managing Director Bo Lindberg says:
"The Enterprise Agreement creates more value
for our customers as well as reduces risks
of license non-compliance and associated
costs. Moreover, Toroid will have immediate
access rights at all times during the terms
of our enrolment to the most current
versions of the enterprise platform products
elected in the agreement. We look forward
optimistically to achieving multi-fold
benefits with this partnership with
Originally a Swedish company, Toroid merged
with a Norwegian company, Noratel in 2005,
which serves the European market with
operations in 12 countries. Toroid runs
three manufacturing plants in close
proximity to each other in the Katunayake
EPZ and is equipped with technical expertise
and machinery to cater to meet quality
Toroid has now grown exponentially in terms
of plant, machinery and staff over the
years, strengthening its market share in the
USA and Europe.
To improve productivity, communications and
collaboration with and among its group
offices and customers, Toroid standardised
its information infrastructure on Microsoft
server and desktop software, thus signing up
for a Microsoft Volume Licensing Enterprise
Agreement. Through the Enterprise Agreement,
Toroid simplified its license management,
reduced licensing costs, gained predictable
budgeting, maximized value from software
expenditures, and is able to more
efficiently deploy new technologies.
The organisation found that to maintain its
competitive advantage through rapid growth,
it needed to equip its workers with
consistent software tools. Further, the
company also wanted to streamline
administration and support, while
maintaining predictable IT costs.
The Enterprise Agreement moreover simplifies
license tracking, which is an advantage in a
scenario where there is mounting legal
action against illegal software being sold
to unsuspecting clients by software dealers.
Under the Enterprise Agreement, all users
are provided access to the latest Windows
operating system and the 2007 Microsoft
Office. IT support can take advantage of
features such as free software upgrades to
strategically plan the company's new
business requirements as and when they need
to. In addition, an Enterprise Agreement
offers significant savings on desktop
licensing costs and provides Software
Assurance benefits such as upgrade rights,
training and more.
Technology boosts growth
A small increase in the number of mobile
phone and internet users can boost GDP
growth substantially, Ambassador of Norway
in Sri Lanka Tore Hattrem said.
Addressing the Sixteenth Business for Peace
Forum organized by the Federation of
Chambers of Commerce and Industry of Sri
Lanka (FCCISL) and held recently, he said
that interconnectivity is the essence of a
Information and communication technology
play a central role in economic growth and
Hattrem said that a culture that stimulates
innovation should be adopted. The first
step towards adopting an innovation culture
is to import existing technologies and adapt
them to the location situation. For Sri
Lanka to capture the benefits of the
knowledge economy, it will need to improve
the quality of education and expand access
to higher education and vocational training.
He said that island could learn from
countries like Korea, Singapore and China;
three countries at different stages in their
development of a more knowledge based
Hattrem said that Sri Lanka's overriding
problem is not of an economic nature but
political-to find a political solution to
the violent internal conflict which has
ravaged the country for almost 30 years.
He also said that only the private sector in
a market economy combined with good
governance can achieve high economic and
social development. Hattrem said that the
public sector must move out of areas which
are better handled by the private sector.
Public sector should involve in developing
infrastructure, introducing a climate
necessary for growth, investing in education
and other essential services, he said.
Hattrem said that according to a recent
study by the World Bank, the time is now
right for Sri Lanka to begin transitioning
towards a knowledge-based economy.
Application of knowledge has always been
pivotal for development and studies have
shown that simply adopting widely available
technologies in the developed world can
dramatically boost economic growth and
productivity, he said.
He said that countries should focus on
creating a good business environment to
create initiatives for business to be
creative and innovative.
Janaka Kumarasinghe was appointed as the
Secretary General of the Asia Pacific
Federation of Human Resources Management (APFHRM)
for the next two years at its meeting held
at Wellington, New Zealand, recently.
APFHRM comprises 15 member countries namely
Australia, Bangladesh, Hong Kong, India,
Indonesia, Japan, Malaysia, New Zealand,
Papua New Guinea, Philippines, Singapore,
Sri Lanka, Taiwan, Thailand and Saudi
Kumarasinghe is an APFHRM and IPM Past
President. Peter Wilson of Australian Human
Resource Institute will be APFHRM President
for the next two years.
John Keells Holdings PLC Director Sumithra
Gunesekera was elected President of the Sri
Lanka-Australia-New Zealand Business Council
(SLANZBC) at its AGM held recently.
Vice Presidents:- Senaka Silva ( CEO Saraa
OS Leather); Ramya Perera (Business
Development Manager, Infotechs Ltd.); Mark
Francis (Executive Director, Malship
(Ceylon) Ltd.) and Lionel Silva (Chairman,
Lidechsi (Pvt) Ltd.).
Committee Members:- Ms. Aban Pestonjee (Abans
Ltd.,), Anton Godfrey (AG International
(Pvt.) Ltd.), Sarath Fernando (Asia Pacific
Golf Courses Ltd./Waters Edge), Rajitha
Kariyawasn (Ansell Lanka (Pvt) Ltd.),
Susantha Pinto (Ceylinco Renewables (Pvt)
Ltd.), Achyut Reddy (Fonterra Brands Lanka (Pvt)
Ltd.), Shirantha Peries (Mega Pharma (Pvt)
Ltd.), Jerome La'Brooy (Prestige Foods Lanka
(Pvt) Ltd.), Miran Wickramasuriya (Sunpower
Systems (Pvt) Ltd.) and Lalith Senevirathne
(Westmann Engineering Co. Ltd.).
Keells Holdings PLC's (JKH's) buy back price
at Rs. 90 a share is not enough, market
have had been priced at around Rs. 140, they
sources alleged that this "buy back" offer
was to prevent its share from falling. JKH
closed the week at Rs. 86.25, down 25 cents
over its Thursday's closing price..
JKH, in a
stock market announcement on Wednesday, said
that they are making an offer to buy back
their own shares on a pro rata basis of one
share for every 25 shares held upto a
maximum of 25.5 million ordinary shares at
Rs. 90 per share (total investment of Rs.
2.3 billion), together with an interim
dividend of Rs. 1 per share.
that the JKH Board is of the view that the
share price as is currently prevailing
presents an opportunity for the company to
repurchase its shares. However, JKH
directors who are shareholders will not be
accepting the offer. Offer period is to be
Shoring up the rupee
continued to be under pressure due to
government's US dollar borrowings from the
market, with the State owned Bank of Ceylon
intervening on behalf of the
government/Central Bank, by trading dollars
at the Rs. 107/88/92 levels on Friday,
market sources said.
government has been active in the market in
the past month in trying to shore up the
rupee to these levels due to its own heavy
dollar borrowing agenda, they said.
overnight call money market rates (OMR), the
rates at which commercial banks lend to each
other for a day, peaked at the 20% levels in
the last two days of the week, with the OMR
beginning its ascent, from a low base of
14.63% that prevailed 36 days ago, on August
20, to date.
Share buy back
Electrical Corporation PLC (AEC), a company
controlled by Ajita de Zoysa, has offered to
buy its shares held by "others" at Rs. 1,800
of the company or 267,652 its shares are
held by others.
Finance PLC and Asian Finance Ltd., two
Ceylinco Consolidated companies have
announced an amalgamation.
merger, Asian Finance shareholders will
receive seven ordinary shares of Ceylinco
Finance for every two ordinary shares held
by them in Asian Finance.
Finance's current stated capital is Rs.
announcement further said that any
fractional shares arising from this share
swap will be settled in cash.
a maximum of 1,094,345 ordinary shares of
Ceylinco Finance will be issued to minority
shareholders representing 11% of the shares
issued by Asian Finance. The balance 89% of
shares held by Ceylinco Finance in Asian
Finance will be cancelled.
volatile oil prices and environmental
concerns point to the need for new ship
designs capable of operating efficiently at
at recent high levels many owners have been
implementing or considering slow steaming
Register however warns that care needs to be
taken when running at reduced power outputs.
Most container ships trading today, and on
order, were designed for a world of
relatively low energy prices. (Marine Talk)
Law in changing world
of Sri Lanka (IBSL) has organized a seminar
on "Role of Sri Lankan Legal Counsel in
changing world" which will be held at Hotel
Galadari on October 8.
Among the speakers are Dr. Wickrema
Weerasooria, Wijeyadasa Rajapakshe, Dr.
Harsha Cabral, Arittha Wikramanayake,
Prasantha Lal De Alwis, Thusantha Wijemanna
and Ravi Algama.
College of Banking & Finance Director R.
Villavarajahsaid that this seminar has a
rare combination of facilitators.
Deputy Director Training Mrs. Buddhika
Godakanda said that in the future IBSL would
organize programmes of this nature to cater
to legal and other professionals.
Seminar Director Lasantha Senaratne said
that this seminar will be a boost for the
institute to extend its services beyond the
financial sector to the rest of the
professionals which has become an essential
requirement in today's context.
Deputy Central Bank Governor W.A.
Wijewardena holds the position of Chairman
and will be the key note speaker at the
Rohantha Athukorale will be the guest
speaker for TMC's (The Management Club's)
Tuesday evening's presentation titled "The
Way Forward for Sri Lanka Inc amidst a
costly conflict" at the Berjaya Mount Royal
Hotel This is the 5th in a series of evening
presentations organised by TMC for this
Athukorala heads Economic Affairs in the
Government Peace Secretariat under the
Today's edition of Benchmark features Sri
Lanka Telecom Mobitel CEO Suren Amarasekera
on the "ground realities" of telecoms in Sri
Lanka and its future.
He also suggests how the state of mobile
telephony could help in positioning Sri
Also on the programme is an update on
business confidence vis-…-vis the LMD-Nielsen
Business Confidence Index; while the 'Voice
Of Business' shares its perspective on
making micro finance in Sri Lanka work.
Benchmark is presented by LMD and is aired
on TNL on Sundays at noon, with a repeat in
the evening. The show is also carried over
cable TV, on LBN's Bloomberg Television
Rs. 2 lakhs for cancer
Standard Chartered Bank (SCB) raised funds
towards the purchase of testing kits valued
at over Rs. 200,000 that were required by
the Cancer Hospital's Hematology Unit.
A part of the sum collected will also be
used towards upgrading Wards 3 and 4 of the
Cancer Hospital as well as refurbishing the
doctor's and nurse's quarters.
Associated at this event were SCB's Chief
Financial Officer Ozman Faizan, Chief
Executive Officer Clive Haswell and
Maharagama Cancer Hospital Deputy Director
Dr. Neelamai Paranagama.
$ 45 mn., facility
HSBC on Wednesday announced the successful
arrangement of a US$45million, Chinese
Export Credit Agency (ECA)-Sinosure backed
loan facility to Mobitel (Pvt) Ltd. This is
the first time that a transaction has been
supported by Sinosure for a Sri Lankan
Toni&Guy, UK, the only hairdressing company
to be awarded "Super Brand" and "Cool Brand"
status is now in Sri Lanka.
Extre-M Dynamics International (Pvt) Ltd.,
is a newly setup subsidiary of a large Group
of Companies which together with their
Japanese partners have investments of over
US$ 15 million in Sri Lanka.
This latest venture is a result of the
Group's diversification strategy propelled
by Group Chairman Naushad Mohideen.
A soft launch for professionals in the
industry was held at Cinnamon Grand
The products will be made available through
"exclusive" salons, spas, "brand conscious"
outlets in selected malls and other
specialized health and beauty care centres.
Ms Shamalie Fonseka, the woman in-charge of
this operation says, Extre-M Dynamics
International is dedicated to pushing the
boundaries of hairdressing in Sri Lanka with
Toni&Guy to deliver creativity, quality and
consistency to every client.
Contribution to economy
Planters' Association of Ceylon (PAC) has
181 members that manage a total of 426
factories/production units of which 336 are
tea factories, 88 rubber factories and two
coconut DC mills/manufacturing units.
Tea accounts for 84,318.19 hectares (ha.)
under PAC membership which is 37.98% of the
national extent of 222,000 ha. Rubber
accounts for 49,158.30 ha., which is 40.96%
of the national extent of 120,000 ha., and
coconut and other crops 31,520.89 ha.
Adawatte estate Lunugala, managed by Finlays
Tea Estates Sri Lanka established two new
all time records in the Uva medum catalogue
at the Colombo tea auction recently,
fetching the highest ever recorded price for
a BOP1 grade of Rs.960-and an OP grade at
Rs.1,240; these lines were bought by Ceylon
Tea Marketing and Uniliver Ltd.
The broker for Adawatte is John Keells Ltd.
Adawatte also secured the number one
position in Uva catalogue in NSA for year
2007 and is led by Superintendent Shamil
Perera, Snr. Asst. Superintendent Manoj
Pathiranage, and Factory Officer K.A. Percy.